Dublin court may combine cases over HSBC duty to Madoff fund
Tuesday December 22 2009
An Irish judge said he may combine cases brought by investors that lost assets in a Dublin fund linked to Bernard Madoff’s pyramid scheme to determine HSBC Holdings’s duties as the fund’s custodian.
Judge Frank Clarke in Dublin said he may consider “a single trial of that matter across the whole range of cases” to resolve whether a custodian bank has a fiduciary relationship to investors or the fund.
“A determination of the question” in a separate trial “is a matter with potentially far-reaching consequences, not just for these proceedings but also for the relationship between a custodian holding UCITS funds in Ireland and such funds and investors in such funds,” Clarke said in the December 21 judgment. The European funds at issue are known as Undertakings for Collective Investment in Transferable Securities, or UCITS.
HSBC, Europe’s largest bank by market value, is facing investor complaints in for allegedly failing in its duties as custodian for Thema International Fund Plc. Custodians are charged with oversight of funds, and manage deposits and payments to investors.
Yesterday’s ruling was in a case brought by French investor Aforge Finance SAS, which lost about €54 million in Thema.
A HSBC spokesman in London declined to comment, saying the ruling was on a technical issue.
Madoff, 71, pleaded guilty in March and was sentenced to 150 years in prison for using money from new clients to pay earlier investors.
- Stephanie Bodoni
© Bloomberg
